LOS ANGELES — Following the recent implementation deadline, Mobius Payments wants to remind all brick and mortar merchants that EMV-compliance (Europay, MasterCard, and Visa) is the new standard in the U.S.
According to the company, as of October 1, the major credit card companies (MasterCard, Visa, Discover and American Express), began shifting liability for credit card fraud from the card issuer to merchants that are not EMV-compliant — but now that the deadline has passed, what happens next?
Mobius Payments CEO Mia Hyun says that the liability shift is just that — the accountability for fraudulent or counterfeit transactions has passed to the merchant.
“If the merchant’s credit card terminal is not compliant with the EMV standards, meaning it cannot accept a credit or debit card containing a chip,” Hyun notes, “the liability for fraudulent transactions has been transferred to the merchant who continues operating non-compliant hardware after the deadline.”
For example, if a merchant is operating a compliant terminal and experiences a fraudulent EMV transaction using the chip and signature method, the issuing bank will be liable. However, if the merchant’s terminal is only capable of reading the magnetic stripe and the card that is used in the fraudulent activity has a chip, the merchant will be liable for that transaction even though they are a victim of fraud.
“What it comes down to is this,” Hyun explains, “if the card contains a chip, but the credit card terminal doesn’t have a chip reader, or is not programmed to utilize the chip reader, the merchant can be liable for counterfeit as well as lost or stolen card activities.”
“If a merchant is still operating non-compliant equipment, it is highly recommended to obtain compliant equipment in order to be covered by the liability shift,” Hyun adds. “If your business is in need of an EMV-compliant terminal, you should contact your merchant services provider immediately.”
It is important to note that the liability shift only affects merchants who conduct business face-to-face — it does not affect electronic commerce or mail order/telephone order businesses.